“It’s a heavy lift to turn around, but it’s a fundamental asset, strong franchise in an essential infrastructure business. We can improve that a lot in the next one to two years,” he said.
Making matters worse, GE executives acknowledged a number of missteps in recent years. The company misread aspects of the power market, leaving it with large inventories of equipment.
“We have exacerbated the market situation with some really poor execution,” Flannery said.
On Monday, Russell Stokes, the president and CEO of GE Power, said his unit would aim to cut about $1 billion in structural costs, fix operational problems and adjust the size of the business to meet the realities of the market. He also said GE is lowering its outlook for the amount of equipment it expects to sell next year.
Flannery also signaled that GE will consider selling off its majority share in Baker Hughes, a separately traded company formed by the merger of GE’s oil and gas unit and oilfield services firm Baker Hughes.
GE Oil & Gas was primarily known as an equipment manufacturer, while Baker Hughes specializes in services like horizontal drilling and hydraulic fracturing. The company aims to better compete with giants like Halliburton and Schlumberger and to use GE’s big data analytics capabilities to improve Baker Hughes’ services.